San Jose airport could raise rental car fees to make up for financial loss

Those looking to rent a car at San Jose’s downtown airport may soon face a heftier bill if city leaders vote to approve fee hikes for travelers.

San Jose’s airport has struggled financially amid COVID-19 stay-at-home orders. In a memo, John Aitken, director of aviation, said increasing Customer Facility Charge fees — daily fees charged to customers when they rent a car — could help the airport recover.

Aitken proposed increasing fees from $7.50 per day to $9 per day per car rental for a maximum of five days. The fee increase would take effect Feb. 1, 2021, if approved.

Based on projections starting in 2010, a $9 fee would bring the city a total of $694,375,335 by 2041. The city would only receive $578,646,113 in revenue if fees stayed at $7.50.

In 2018, the $7.50 fee brought in $20,881,815, according to a 2019 report.

Airports charge car-renters a number of fees to cover the costs of operating and maintaining their facilities. The CFC pays service debt on the airport’s rental car garage and funds a transportation system that shuttles customers between Terminal A and the rental car garage.

“The maximum $7.50 per day rate has been in place and was sufficient to cover the debt service and transportation costs, until the current COVID pandemic impacted the number of passengers renting cars as well as the associated CFC collections,” Aitken wrote. “Based on current projections for 2021 through 2041, CFC collections at the current maximum rate will be insufficient to cover the debt service and the transportation costs between Terminal A and the Consolidated Rental Car Garage.”

On-airport rental car companies, such as Hertz and Enterprise, are expected to make up for whatever the fees cannot cover through rent payments.

Aitken’s memo said that fee increases “will help support the rental car operations and their workforce retention in the short- term and the long-term.”

According to TSA checkpoint data, travel was down by more than 1.5 million people nationally on Dec. 31, when compared to data from the previous year— so it’s no surprise that the rental car industry has taken a hit.

Car rentals at San Jose Mineta International Airport are down by 80% in comparison to 2019 numbers, according to airport spokesperson Demetria Machado. Flying is also down by around 80%. 

Hertz, which has a branch at San Jose Airport, filed for bankruptcy in May 2020 at the beginning of the pandemic.

“The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the Company’s revenue and future bookings,” Hertz said in a statement. “The financial reorganization will provide Hertz a path toward a more robust financial structure that best positions the Company for the future as it navigates what could be a prolonged travel and overall global economic recovery.”

If the council approves the fee increase, Aitken will have the power to adjust the fee as needed, but the fee will not exceed $9 per day for five days.

The San Jose City Council meeting begins Jan. 5 at 1:30 p.m. To watch, visit San Jose’s YouTube page.

Contact Carly Wipf at [email protected] or follow @CarlyChristineW on Twitter.